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Popeyes was founded in New Orleans, Louisiana in 1972 and is the worldâ€™s second largest quick-service chicken concept based on the number of units. Within the QSR industry, Popeyes distinguishes itself with a unique â€śLouisianaâ€ť style menu that features spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice and other regional items. Popeyes is a highly differentiated QSR brand with a passion for its Louisiana heritage and flavorful authentic food.

As of December 30, 2012, we operated and franchised 2,104 Popeyes restaurants in 47 states, the District of Columbia, Puerto Rico, Guam, the Cayman Islands and 26 foreign countries. The map below shows the concentration of our domestic restaurants by state.

As of December 30, 2012, of our 1,634 domestic franchised restaurants, approximately 70% were concentrated in Texas, California, Louisiana, Florida, Illinois, Maryland, New York, Georgia, Virginia and Mississippi. Of our 425 international franchised restaurants, approximately 60% were located in Korea, Canada, and Turkey. Of our 45 company-operated restaurants, approximately 80% were concentrated in Louisiana and Tennessee.

Financial information concerning our domestic and international operations can be found in Item 7, â€śManagementâ€™s Discussion and Analysis of Financial Condition and Results of Operationsâ€ť in this Annual Report on Form 10-K.

Our Business Strategy
Through its strategic plan, the Company has achieved momentum in growing shareholder value through intense focus on its single brand, Popeyes Louisiana Kitchen. To accelerate that momentum, the Company remains fully engaged in the execution of the original four pillars of its strategic plan launched in 2008. Those pillars are as follows:

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Build a Distinctive Brand

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With bold, flavorful food promoted by relevant advertising, national media impact and a spokesperson who resonates with a broad consumer audience, Popeyesâ€™ emphasis on growing a distinctive brand has fueled our 10% cumulative increase in same stores sales over the last two years.

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For four years in a row, our domestic same-store sales outpaced the chicken QSR and the entire QSR category according to independent data.

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Run Great Restaurants

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Popeyes use of metric-driven scorecards to measure each restaurantâ€™s performance in terms of guest experience, culture, operations, sales, and profits is a key differentiator of our brand. In 2012, our enhanced Guest Experience Monitor (â€śGEMâ€ť) yielded higher response rates, and identified areas of opportunity to deliver service that matches the quality of our food. As of year-end, approximately 70% of guest respondents rated Popeyes service a 5 out of 5 on the guest survey.

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We finished 2012 with over 400 restaurants in the new Popeyes Louisiana Kitchen image and approximately 100 additional restaurants in progress. We expect to have over 60% of our domestic system in the new image by the end of 2013.

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Average restaurant operating profit margins, before rent, of Popeyes domestic freestanding franchised restaurants have increased to more than 20% through the end of the third quarter of 2012. Average restaurant operating profit increased by approximately $30,000 over last year, for a year-over-year growth rate of approximately 19%.

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Our strong sales performance and continued focus on cost saving initiatives offset commodity inflation of approximately 2% for the full year 2012. For 2013, we expect commodity costs to be essentially flat year-over-year, based on current market indications.

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Accelerate Quality Restaurant Openings

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The annual new restaurant growth of our global system has averaged approximately 6% over the last 5 years.

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As a result of rigorous site selection and strong franchisee partners, the average first year sales of Popeyes new domestic freestanding restaurants are exceeding the overall domestic system average by approximately 40%.

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We believe the Popeyes operating system and our disciplined real estate selection will continue to deliver new Popeyes restaurants with strong returns on investment for the Company portfolio as well as for our franchisees. The contribution to earnings made by company-operated restaurants is accretive to our shareholders, and fuels our investment in our franchise system.

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We believe the acquisition of restaurants in Minnesota and California will accelerate our development in these under-penetrated areas while providing an opportunity for growth by high performing franchisees.

Of our 2013 expected adjusted earnings per share, approximately $0.10 will be derived from one-time fees associated with the conversion of these acquired restaurants.

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Popeyes International continued its focus on strengthening existing markets and laying the groundwork for future growth. In the 4th quarter, 20 new restaurants were opened internationally, bringing total openings to 57 for the year. The initial sales results of these restaurants are trending higher than the international system average as a result of improved site selection, new restaurant marketing support and differentiated brand messaging.

In addition to these original four strategic pillars, the Company added a fifth strategic pillar during 2012 designed to sustain brand momentum and profitability in the future.

Creating a Culture of Servant Leaders

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Our stated Popeyes purpose is â€śto inspire servant leaders to achieve superior results.â€ť Serving others and developing leaders is the essence of what we do for a living. With our fifth pillar, we are building a culture and people capability which we believe will translate to a meaningful competitive advantage in our team membersâ€™ and guestsâ€™ experience.

The Company believes that our strategic plan will continue to keep us focused on the essential elements of chain restaurant success: a differentiated and innovative brand, a delightful guest experience in a beautiful restaurant environment, and a growing franchisee network experiencing strong profitability and sound investment returns. This is how we plan to deliver our growth goals and create value for our shareholders.

The following features of the Company are material to the execution of our initiatives and business strategies discussed above.
Our Agreements with Popeyes Franchisees

Our strategy places a heavy emphasis on increasing the number of restaurants in the Popeyes system through franchising activities. As of December 30, 2012, we had 340 franchisees operating restaurants within the Popeyes system, and several preparing to become operators. Our largest domestic franchisee operates 143 restaurants and our largest international franchisee operates 101 restaurants. The following discussion describes the standard arrangements we enter into with our Popeyes franchisees.

Domestic Development Agreements. Our domestic franchise development agreements provide for the development of a specified number of Popeyes restaurants within a defined geographic territory. Generally, these agreements call for the development of the restaurants over a specified period of time, usually three to five years, with targeted opening dates for each restaurant. Our Popeyes franchisees currently pay a development fee ranging from $7,500 to $12,500 per restaurant. Typically these development fees are paid when the agreement is executed, and are non-refundable.

International Development Agreements. Our international franchise development agreements are similar to our domestic franchise development agreements, though the development time frames can be longer with development fees of up to $15,000 for each restaurant developed. Depending on the market, limited sub-franchising rights may also be granted.

Domestic Franchise Agreements. Following the execution of a development agreement, we enter into a franchise agreement with our franchisee that conveys the right to operate a specific Popeyes restaurant at a site to be selected by the franchisee and approved by us within 180 days from the execution of the franchise agreement. Our current franchise agreements generally provide for payment of a franchise fee of $30,000 per location. Based on our development incentive programs, in some circumstances the franchise fee could be reduced or eliminated altogether.
These agreements generally require franchisees to pay a 5% royalty on net restaurant sales. In addition, franchisees must contribute to national and local advertising funds. Payments to the advertising funds are generally 4% of net restaurant sales. Some of our institutional and older franchise agreements provide for lower royalties and advertising fund contributions.

International Franchise Agreements. The terms of our international franchise agreements are substantially similar to those included in our domestic franchise agreements, except that these agreements may be modified to reflect the multi-national nature of the transaction and to comply with the requirements of applicable local laws. Our current international franchise agreements generally provide for payment of a franchise fee of up to $30,000 per location. In addition, the effective royalty rates may differ from those included in domestic franchise agreements, and may be lower due to the greater number of restaurants required to be developed by our international franchisees.

All of our franchise agreements require that our franchisees operate restaurants in accordance with our defined operating procedures, adhere to the menu established by us, and meet applicable quality, service, health and cleanliness standards. We may terminate the franchise rights of any franchisee who does not comply with these standards and requirements.

Site Selection

For new domestic restaurants, we assist our franchisees in identifying and obtaining favorable sites consistent with the overall market plan for each development area. Domestically, we primarily emphasize freestanding sites with drive-thrus and â€śend-cap, in-lineâ€ť strip-mall sites with ample parking and easy access from high traffic roads.

Each international market has its own factors that lead to venue and site determination. In international markets, we use different venues including freestanding, in-line, food court and other nontraditional venues. Market development strategies are a collaborative process between Popeyes and our franchisees so we can leverage local market knowledge.

Suppliers and Purchasing Cooperative

Suppliers. Our franchisees are required to purchase all ingredients, products, materials, supplies and other items necessary in the operation of their businesses solely from suppliers who have been approved by us. These suppliers are required to meet or exceed strict quality control standards, and they must possess adequate capacity to supply our restaurant system reliably.

Purchasing Cooperative. Supplies are generally provided to our domestic franchised and company-operated restaurants pursuant to supply agreements negotiated by Supply Management Services, Inc. (â€śSMSâ€ť), a not-for-profit purchasing cooperative. We, our Popeyes franchisees and the owners of restaurants of the other participating brand hold membership interests in SMS in proportion to the number of restaurants owned. As of December 30, 2012, we held one of seven seats on the SMS board of directors. Our Popeyes franchise agreements require that each domestic franchisee join SMS.

Supply Agreements. The principal raw material for a Popeyes restaurant operation is fresh chicken. Company-operated and franchised restaurants purchase their chicken from suppliers who service the Popeyes system. In order to ensure favorable pricing and to secure an adequate supply of fresh chicken, SMS has entered into supply agreements with several chicken suppliers. These contracts, which pertain to the vast majority of our system-wide purchases, are â€ścost-plusâ€ť contracts with prices based partially upon the cost of feed grains plus certain agreed upon non-feed and processing costs.

We have entered into long-term beverage supply arrangements with certain major beverage vendors. These contracts are customary in the QSR industry. Pursuant to the terms of these arrangements, marketing rebates are provided to the owner/operator of Popeyes restaurants based upon the volume of beverage purchases.
We also have a long-term agreement with an exclusive supplier of certain proprietary products for the Popeyes system. This supplier sells these products to our approved distributors, who in turn sell them to our franchised and company-operated Popeyes restaurants.

CEO BACKGROUND

Who are this yearâ€™s nominees?

There are eight directors nominated by the Board of Directors that are standing for election this year to hold office until the 2013 annual meeting of shareholders and until their successors are elected. Biographical information about our nominees for director and the experience, qualifications, attributes and skills considered by our Corporate Governance and Nominating Committee and Board in determining that the nominee should serve as a director appears below. For additional information about how we identify and evaluate nominees for director, see â€śCorporate Governance and Nominating Committeeâ€ť.
Krishnan Anand, age 54, has served as a director since November 2010. Since December of 2009, Mr. Anand has served as president of the International Division and Head of Global Strategy/M&A of Molson Coors Brewing Company in Denver, Colorado and head of Global Strategy Development since 2009. Prior to joining Coors, Mr. Anand served from 1997 to 2009 in a number of senior marketing and management positions with The Coca-Cola Company, most recently as President of the Philippines Business Unit in Manila, Philippines. From 1980 to 1997, Mr. Anand served in various managerial positions with Unilever plc in India.
Mr. Anand brings to the Board, among other skills and qualifications, broad management and marketing experience in international business, as well as his track record of judgment and achievement, as demonstrated during a 31 year career in leadership positions at major international companies in the consumer products industry. Mr. Anandâ€™s experience and skills make him valuable to the Board as a member of our People Services (Compensation) Committee and our Corporate Governance and Nominating Committee.

Victor Arias, Jr ., age 55, has served as a director since May 2001. Since May 2007, Mr. Arias has been a senior client partner with Korn Ferry International, an executive search firm. From November 2004 until May 2007, Mr. Arias was a partner with Heidrick & Struggles, an executive search firm. From April 2002 until November 2004, Mr. Arias was an executive search consultant with Spencer Stuart. He is a trustee emeritus of Stanford University. Mr. Arias currently serves on the Board of Directors of Edioma, a private company.

Mr. Arias brings to the Board, among other skills and qualifications, extensive management and operational expertise, as well as his track record of judgment and achievement, as demonstrated by his leadership positions as a partner at several international executive search firms and a senior executive at several national real estate companies. Mr. Ariasâ€™ experience and skills make him valuable to the Board as chair of our People Services (Compensation) Committee and as a member of our Corporate Governance and Nominating Committee.

Cheryl A. Bachelder, age 55, has served as a Director since November 2006. Since November 2007, Ms. Bachelder has served as our Chief Executive Officer and President. Ms. Bachelder currently serves as a member of the True Value Company Board of Directors. Ms. Bachelder serves on the Advisory Board of AFPI, the franchising venture of Procter & Gamble. Ms. Bachelder also serves as a member of the National Restaurant Association Board of Directors. Ms. Bachelder served as the President and Chief Concept Officer of KFC Corporation from 2001 to 2003. From 1995 to 2000, Ms. Bachelder was Vice President, Marketing and Product Development for Dominoâ€™s Pizza, Inc.

Ms. Bachelder brings to the Board, among other skills and qualifications, her experience in the leadership position as CEO of our Company, as well as her track record of judgment and achievement and leadership, as demonstrated during a 16 year career in the Quick Service Restaurant industry in leadership positions at major restaurant companies and over 33 years of proven managerial experience in the retail and consumer products industries.
Carolyn Hogan Byrd, age 63, has served as a director since May 2001. Ms. Byrd founded GlobalTech Financial, LLC, a financial services and consulting company headquartered in Atlanta, Georgia in May 2000 and currently serves as chairman and chief executive officer. From November 1997 to October 2000, Ms. Byrd served as president of The Coca-Cola Financial Corporation. From 1977 to 1997, Ms. Byrd served in a variety of domestic and international positions with The Coca-Cola Company. In addition to serving as chairman of the Board of Directors of Global Tech Financial, LLC, Ms. Byrd currently serves on the Board of Directors of Freddie Mac and Regions Financial Corporation. Ms. Byrd previously served on the Board of Directors of the St. Paul Companies, Inc., Circuit City Stores, Inc. and RARE Hospitality, Inc.

Ms. Byrd brings to the Board, among other skills and qualifications, extensive management, financial, and board level expertise, as well as her track record of judgment and achievement, as evidenced by leadership positions as chairman and chief executive officer of a financial services company, and president of the financial division of a global beverage company. Further, her service as a director of other public companies provides her with broad experience as well as skills that make her valuable to the Board as chair of our Corporate Governance and Nominating Committee and a member of our Audit Committee.
John M. Cranor, III, age 65, has served as a director since November 2006 and Chairman of our Board since November 2007. From 2003 until 2008, Mr. Cranor served as the President and Chief Executive Officer of the New College Foundation, affiliated with the New College of Florida in Sarasota. From 2000 to 2003, Mr. Cranor was a managing General Partner of Yearling Fund, LLC, an early stage investment fund. He currently continues to serve as a Limited Partner in the Yearling Fund. From 1996 to 1999, Mr. Cranor served as Chairman, President and Chief Executive Officer of Long John Silverâ€™s Restaurants, Inc. From 1989 to 1994, Mr. Cranor was President and Chief Executive Officer of KFC Corporation.

Mr. Cranor brings to the Board, among other skills and qualifications, broad managerial and operational experience as well as his track record of judgment and achievement, as demonstrated by his leadership positions as president and chief executive officer of major Quick Service Restaurant companies, as well as broad corporate experience and executive skills that make him valuable to the Board as Chairman of the Board and as an ex-officio member of our People Services (Compensation) Committee, Corporate Governance and Nominating Committee and Audit Committee.

John F. Hoffner, age 64, has served as a director since August 2006. From 2001 until his retirement in 2005, Mr. Hoffner served as Executive Vice President and Chief Financial Officer of Jack in the Box Inc. From 1998 to 2001, Mr. Hoffner served as Executive Vice President and Chief Financial Officer of Cost Plus, Inc. Mr. Hoffner serves on the Board of Directors of St. Maryâ€™s Good Samaritan Hospital, a non-profit hospital organization, and previously served on the Board of Directors of the Krannert Management School at Purdue University, and the Boards of Directors of Junior Achievement of Los Angeles and San Diego.

Mr. Hoffner brings to the Board, among other skills and qualifications, significant public company experience in the restaurant and retail industries in the areas of corporate finance and accounting, distribution and logistics, and strategic planning, as well as his track record of judgment and achievement, as evidenced by his leadership positions as chief financial officer of a major Quick Service Restaurant company and a national retail concept, as well as board experience and skills that make him valuable to the Board as chair of our Audit Committee and as a member of our People Services (Compensation) Committee.
R. William Ide, III, age 71, has served as a director since August 2001. Mr. Ide is a partner with McKenna Long & Aldridge, LLP, a national law firm. Mr. Ide is a former Secretary and General Counsel of Monsanto Corporation, former Counselor to the United States Olympic Committee and was president of the American Bar Association. Mr. Ide currently serves on the Board of Directors of the Albermarle Company and on the Board of Directors of the East-West Institute. Mr. Ide is currently the chairman of the Conference Boardâ€™s Governance Center Advisory Board. Mr. Ide also serves as a trustee of Clark Atlanta University.
Mr. Ide brings to the Board, among other skills and qualifications, over 40 years of experience in corporate and securities laws, investment banking, and corporate governance matters, as well as his track record of judgment and achievement, as demonstrated by his experience as a leading partner in a national law firm and general counsel of a worldwide chemical company, and as president of the American Bar Association. Further, his service as chairman of the Conference Boardâ€™s Governance Center Advisory Board and his service as a director of other public companies make him valuable to the Board as a member of our Corporate Governance and Nominating Committee and as a member of our Audit Committee.

Kelvin J. Pennington, age 53, has served as a director since May 1996. Since 1990, Mr. Pennington has served as President of Pennington Partners & Co., an investment management and financial consulting firm. From 1982 to 1990, Mr. Pennington served in a variety of management positions for Prudential Capital Corporation, including Vice President of Corporate Finance.

Mr. Pennington brings to the Board, among other skills and qualifications, significant experience in finance, accounting and private equity, as well as his track record of judgment and achievement, as evidenced by his leadership position at an investment management and financial consulting firm. Mr. Pennington has been a member of our Board since 1996 and his experience with our Company and his corporate finance skills make him valuable to the Board as a member of our Audit Committee and People Services (Compensation) Committee.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF THESE DIRECTORS

MANAGEMENT DISCUSSION FROM LATEST 10K

Nature of Business

AFC develops, operates, and franchises quick-service restaurants under the trade names Popeyes Â® Chicken & Biscuits and Popeyes Â® Louisiana Kitchen (collectively â€śPopeyesâ€ť) in 47 states, the District of Columbia, Puerto Rico, Guam, the Cayman Islands, and 26 foreign countries. Popeyes has two reportable business segments: franchise operations and company-operated restaurants. Financial information concerning these business segments can be found at Note 20 to our Consolidated Financial Statements.

Management Overview of 2012 Results

Our fiscal year 2012 results and highlights include the following.

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Reported net income was $30.4 million, or $1.24 per diluted share, compared to $24.2 million, or $0.97 per diluted share, in 2011. Adjusted earnings per diluted share, which included approximately $0.01 for the 53 rd week of operations, were $1.24 compared to $0.99 in 2011, a 25% increase. Adjusted earnings per diluted share is a supplemental non-GAAP measure of performance. See the heading entitled â€śManagementâ€™s Use of Non-GAAP Financial Measuresâ€ť.

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The Popeyes system opened 141 restaurants, compared to 140 last year, and permanently closed 75 restaurants, resulting in 66 net openings, compared to 65 in 2011.

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General and administrative expenses were $67.6 million, at 3.0% of system-wide sales compared to $61.3 million at 3.1% of system-wide sales in 2011.

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Operating EBITDA of $55.9 million was 31.3% of total revenues, compared to $45.4 million, at 29.5% of total revenues last year. Operating EBITDA is a supplemental non-GAAP measure of performance. See the heading entitled â€śManagementâ€™s Use of Non-GAAP Financial Measures.â€ť

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Free cash flow was $36.7 million, compared to $28.5 million in 2011. As a percentage of total revenue, free cash flow increased to 20.5%, compared to 18.5% last year. Free cash flow is a supplemental non-GAAP measure of performance. See the heading entitled â€śManagementâ€™s Use of Non-GAAP Financial Measuresâ€ť.

International same-store sales increased 2.6%, compared to a 3.3% increase last year, the sixth consecutive year of positive same-store sales.
For additional information on our business strategies, see the discussion under the heading â€śOur Business Strategyâ€ť in Item 1 to this Annual Report on Form 10-K.

As it concerns our expected same-store sales results for 2013, see the discussion under the heading â€śOperating and Financial Outlook for 2013â€ť later in this Item 7.

2012 Unit Growth

The Popeyes system opened 141 restaurants in 2012, which included 84 domestic and 57 international restaurants, compared to 140 openings in 2011. The Popeyes system permanently closed 75 restaurants in fiscal 2012, resulting in 66 net restaurant openings, compared to 65 net openings last year. These closures included 29 domestic and 46 international restaurants.

Factors Affecting Comparability of Consolidated Results of Operations: 2012, 2011 and 2010
For 2012, 2011, and 2010, the following items and events affect comparability of reported operating results:

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The Companyâ€™s fiscal year ends on the last Sunday in December. The 2012 fiscal year consisted of 53 weeks. All other fiscal years presented consisted of 52 weeks each. The 53rd week in 2012 increased sales by company-operated restaurants by approximately $1.2 million and increased franchise revenues by approximately $1.7 million. The net impact of the 53 rd week earnings per share was approximately $0.01 per diluted share.

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During 2012, 2011 and 2010, the company built five, two new restaurants and one new restaurant, respectively.

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During 2011, the Company recognized $0.8 million of work opportunity tax credits related to prior years.

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The Company recognized $0.8 million in expense for the corporate support center relocation in 2011.

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During 2010 we expensed $0.6 million as a component of Interest expense, net in connection with our new credit facility.

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During 2010, we recorded a tax benefit of $1.4 million, related to the completion of a federal income tax audit for years 2004 and 2005.

Comparisons of Fiscal Years 2012 and 2011

Sales by Company-Operated Restaurants

Sales by company-operated restaurants were $64.0 million in 2012, a $9.4 million increase from 2011. The increase was primarily due to new restaurants opened and a 5.3% increase in same-store sales.

Franchise Revenues

Franchise revenues have three basic components: (1) ongoing royalty payments that are determined based on a percentage of franchisee sales; (2) franchise fees associated with new restaurant openings; and (3) development fees associated with the opening of new franchised restaurants in a given market. Royalty revenues are the largest component of franchise revenues, constituting more than 90%.

Franchise revenues were $110.5 million in 2012, a $15.5 million increase from 2011. The increase was primarily due to an increase in royalties, resulting primarily from an increase in franchise same-store sales of 7.5% during 2012 and new franchised restaurants.

Company Operated Restaurant Profit

Company-operated restaurant operating profit of $11.1 million was 17.3% of sales, compared to $10.2 million and 18.7% of sales last year. The $0.9 million increase in Company-operated restaurant operating profit was primarily due to same-store sales of 5.3% and two new restaurant openings in 2011. The 2012 operating profit includes approximately $0.3 million in pre-opening costs associated with opening 5 new restaurants. The 2011 restaurant operating profit includes a $0.5 million favorable adjustment to insurance reserves. Excluding the effects of pre-opening costs in 2012 and the change in estimated insurance reserves in 2011, Company-operated restaurant operating profit margin would have been 17.8% in both 2012 and 2011. Company-operated restaurant operating profit margin is a supplemental non-GAAP measure of performance. See the heading entitled â€śManagementâ€™s Use of Non-GAAP Financial Measures.â€ť

General and Administrative Expenses

General and administrative expenses were $67.6 million at 3.0% of system-wide sales in 2012, a $6.3 million increase from 2011. This increase was primarily attributable to:

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$1.0 million increase in restaurant support and pre-opening costs in new company-operated markets,

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$0.9 million increase in domestic new restaurant development and reimage expenses,

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$0.5 million in legal fees related to licensing arrangements,

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$0.6 million increase in franchisee restaurant support services and new restaurant opening support costs, and

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$0.2 million increase in global support center and other general administrative expenses, net.

General and administrative expenses remain among the most efficient in the industry at approximately 3.0% and 3.1% of system wide sales during 2012 and 2011, respectively.

Other Expenses (Income), Net

Other income was $0.5 million in income in 2012 compared to other expenses of $0.5 million last year. Fiscal 2012 results include $0.9 million in gains on sale of real estate assets to franchisees, partially offset by $0.4 million loss on disposal of property and equipment and other expenses, net. In 2011, the Company recognized $0.8 million in expenses for the global support center relocation, offset by a $0.8 net gain on the sale of assets and $0.5 million in disposals of property and equipment and other expenses, net.

Operating Profit

Operating profit in 2012 was $51.3 million, a $10.6 million increase compared to 2011. Operating EBITDA was $55.9 million compared to $45.4 million in 2011. Fluctuations in the components of revenue and expense giving rise to these changes are discussed above. The following is an analysis of the fluctuations in operating profit by business segment. Operating profit for each reportable segment includes operating results directly attributable to each segment plus a 5% inter-company royalty charge from franchise operations to company-operated restaurants.

The $10.8 million growth in franchise operations was primarily due to the $15.5 million increase in franchise revenue partially offset by increases in general and administrative expenses related to short-term and long-term employee incentive costs, domestic new restaurant development and reimage expenses, legal fees and franchise restaurant support services and new restaurant opening support costs.
Company-operated restaurants segment operating profit was $4.4 million, a $0.8 million or 15.3%, decrease from 2011. For 2012, company-operated restaurant operating profit was $11.1 million, a $0.9 million increase compared to 2011. Company-operated restaurant operating profit was offset by a $0.9 million planned increase in restaurant support and pre-opening costs in new company-operated markets Indianapolis and Charlotte, a $0.4 million increase in training, assessments and support costs in the New Orleans and Memphis company-operated restaurants and a $0.4 million increase in the intercompany royalty charge due to growth in revenues.

Income Tax Expense

Income tax expense was $17.3 million, yielding an effective tax rate of 36.3%, compared to an effective tax rate of 34.6% in 2011. The prior year income tax expense included a tax benefit of $0.8 million, or 2.2%, for work opportunity tax credits related to prior years. Excluding the impact of these tax credits, the 2012 effective rate was lower than 2011 due to minor favorable adjustments to income tax reserves, partially offset by higher state income taxes. The effective rates differ from statutory rates due to adjustments in estimated tax reserves, tax credits and permanent differences between reported income and taxable income for tax purposes.

Comparisons of Fiscal Years 2011 and 2010

Sales by Company-Operated Restaurants

Sales by company-operated restaurants were $54.6 million in 2011, a $1.9 million increase from 2010. The increase was primarily due to new restaurants opened and the 1.1% increase in same-store sales.

Franchise Revenues

Franchise revenues were $95.0 million in 2011, a $5.6 million increase from 2010. The increase was primarily due to an increase in royalties, resulting primarily from an increase in franchise same-store sales during 2011 and new franchised restaurants.

Rent and Other Revenues

Rent and other revenues are primarily composed of rental income associated with properties leased or subleased to franchisees and is recognized on the straight-line basis over the lease term. Rent and other revenues were $4.2 million in 2011, a $0.1 million decrease from 2010.

Company Operated Restaurant Profit

Company-operated restaurant operating profit of $10.2 million was 18.7% of sales, compared to $10.1 million and 19.2% of sales last year. The 50 basis point decrease in Company-operated restaurant operating profit margin for fiscal year 2011 was due to inflation in commodity costs of approximately 8% which were partially offset by nominal menu price increases, supply chain savings and efficiencies in labor and other non-food related costs. Company-operated restaurant operating profit margin is a supplemental non-GAAP measure of performance. See the heading entitled â€śManagementâ€™s Use of Non-GAAP Financial Measuresâ€ť in this Item 7.

Rent and Other Occupancy Expenses

Rent and other occupancy expenses were $2.7 million in 2011, a $0.6 million increase from 2010 primarily due to deferred rent credits recognized related to an assignment of a lease to a franchisee during 2010.

General and Administrative Expenses

General and administrative expenses were $61.3 million at 3.1% of system-wide sales in 2011, a $4.9 million increase from 2010.
This increase was primarily attributable to:

â€˘
$1.7 million increase in international expenses including salary and personnel related costs, travel and other general and administrative costs,

â€˘
$1.2 million increase in domestic new restaurant development expenses,

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$0.9 million increase in franchisee restaurant support services and new restaurant opening support costs,

â€˘
$0.7 million increase in information technology expenses, and

â€˘
$0.4 million increase in incentive and stock-based compensation expense and other general administrative expenses, net.

General and administrative expenses were approximately 3.1% and 3.0% of system wide sales during 2011 and 2010, respectively.

Other Expenses (Income), Net

Other expenses were $0.5 million, compared to other expenses of $0.2 million in the previous year. In 2011, the Company recognized $0.8 million in expenses for the corporate support center relocation, offset by a $0.8 net gain on the sale of assets and $0.5 million in impairments and disposal of fixed assets and other expenses.

See Note 16 to our Consolidated Financial Statements for a description of Other expenses (income), net for 2011 and 2010.

Operating Profit

Operating profit of $40.7 million was $0.5 million less than in 2010 and Operating EBITDA was $45.4 million compared to $45.3 million. Higher revenues were offset by strategic investments to accelerate global sales and new restaurant development and by higher commodity costs in company-operated restaurants. Fluctuations in the various components of revenue and expense giving rise to this change are discussed above.

Operating profit for each reportable segment includes operating results directly allocable to each segment plus a 5% inter-company royalty charge from franchise operations to company-operated restaurants.

The $0.5 million growth in franchise operations was primarily due to the $5.6 million increase in franchise revenue partially offset by increases in general and administrative expenses related to international franchise operations, domestic new restaurant development expenses, franchise restaurant support services and new restaurant opening support costs, information technology expenses and incentive and stock-based compensation expenses.

Company-operated restaurants segment operating profit was $5.2 million, a $0.4 million or 7.1%, decrease from 2010. For 2011, company-operated restaurant operating profit was $10.2 million, a $0.1 million increase compared to 2010. Company-operated restaurant operating profit was offset by a $0.1 million planned increase in restaurant support and pre-opening costs in our Indianapolis company-operated market, a $0.1 million increase in the intercompany royalty charge due to growth in revenues and a $0.3 million increase in information technology support and other general and administrative expenses, net.

Interest Expense, Net

Interest expense, net was $3.7 million, a $4.3 million decrease from 2010. This decrease was primarily due to lower average interest rates under the Companyâ€™s new 2010 credit facility and lower average debt balances outstanding.

Income Tax Expense

Income tax expense was $12.8 million, yielding an effective tax rate of 34.6%, compared to an effective tax rate of 31.0% in the prior year. In 2010, the Company recorded a tax benefit of $1.4 million, or $0.05 per diluted share, related to the completion of a federal income tax audit for years 2004 and 2005. Excluding the tax benefit of $1.4 million during 2010, the 2010 effective tax rate would have been 35.2%. The Companyâ€™s effective tax rate differs from statutory rates due primarily to adjustments in estimated tax reserves and other permanent differences.

The Company continues to strengthen its competitive position in the restaurant industry and quick service restaurant sector by executing its Strategic Plan, which is based on the following pillars:

â€˘
Build a Distinctive Brand
â—¦
In the third quarter, Popeyes followed its latest boneless innovation â€“ Chicken Waffle Tenders â€“ with a celebration of its core Bonafide bone-in chicken positioned as â€śLove That Chicken Monthâ€ť. Together with sustained national media, these promotions helped lead Popeyes to a 21.2% market share of the Chicken-QSR category in the third quarter, up 1.7 percentage points over the same period last year.
â—¦
According to independent industry research, Popeyes has outpaced the domestic same-store sales of the Chicken-QSR category for the 22nd consecutive quarter and the overall QSR category for the 8th consecutive quarter.
â—¦
Internationally, same-store sales have been positive for 15 consecutive quarters. We continue to increase the number of markets where our growth has afforded us the benefit of using TV advertising to message the distinctiveness of the brand.

â€˘
Run Great Restaurants
â—¦
As of the end of the third quarter, approximately 47% of the Popeyes' domestic system had incorporated the new Popeyes Louisiana Kitchen image. The Company expects approximately 60% of our domestic system to be in the new image by the end of 2013. On average, reimaged restaurants are enjoying a 3% to 4% sales lift.
â—¦
At the end of the third quarter, approximately 70% of the domestic system restaurants attained speed of service below our 180 second standard.
â—¦
Guest Experience Monitor (â€śGEMâ€ť) percent delighted scores were approximately 59% at the end of the third quarter for the Popeyes domestic system. We will continue to focus on improving the guest experience by introducing new customer service programs in the restaurants in 2014.

â€˘
Grow Restaurant Profits
â—¦
The average restaurant operating profit before rent of Popeyes' domestic freestanding franchised restaurants increased to 22.0% of total revenues for the first half of 2013, compared to 21.0% last year.
â—¦
Commodity prices decreased approximately 90 basis points in the third quarter versus 2012. We expect commodity costs to continue to moderate in the fourth quarter, bringing our full year 2013 expectations to slightly below 2012.

â€˘
Accelerate Quality Restaurants
â—¦
The average unit volumes of Popeyes' domestic freestanding restaurants opened in 2012 continue to be significantly higher than the domestic freestanding system average due to improved trade areas and site selection processes.
â—¦
Five company-operated restaurants were opened through the end of the third quarter, bringing the total to 49.
â—¦
In the third quarter, we converted and franchised seven of the 26 restaurants acquired in 2012 in Minnesota and California. One-time conversion fees of approximately $1.6 million were recognized in the third quarter as franchising of these restaurants was completed. The remaining six acquired restaurants are expected to be converted in the fourth quarter.

â€˘
Create a Culture of Servant Leaders
â—¦
We place great emphasis on our human capital and its impact on our guest experience and the sustained long term performance of our Company.
â—¦
During the third quarter, we conducted a number of best practices visits with companies across industries as part of our benchmarking research. These efforts will lead to the definition and design of our in-market plans.

Management Overview of Third Quarter 2013 Operating Results
Our third quarter of 2013 results and highlights include the following:

â€˘
Reported net income was $9.0 million, or $0.37 per diluted share, compared to $6.9 million, or $0.29 per diluted share, in 2012.

â€˘
Adjusted earnings per diluted share were $0.38 compared to $0.29 last year. Through the end of the third quarter, adjusted earnings per diluted share were $1.13 compared to $0.91 last year, an increase of 24.2%. Adjusted earnings per diluted share is a supplemental non-GAAP measure of performance. See the heading entitled â€śManagementâ€™s Use of Non-GAAP Financial Measures.â€ť

â€˘
Global system-wide sales increased 12.4%, rolling over a 10.5% increase in the third quarter of 2012, for a two-year growth rate of 22.9%.

â€˘
Global same-store sales increased 5.1% rolling over a 6.3% increase in the third quarter of 2012. Through the end of the third quarter, global same-store sales increased 4.6%, rolling over a 7.1% increase last year, for a two-year same-store sales growth of 11.7%.

â€˘
The Popeyes system opened 39 new restaurants during the third quarter and permanently closed 6 restaurants, resulting in 33 net openings. Through the end of the third quarter, the Popeyes system opened 123 new restaurants and permanently closed 46, for 77 net restaurant openings compared to 23 in 2012.

â€˘
Through the end of the third quarter, Operating EBITDA increased by 25.2% to $51.2 million, at 32.5% of total revenue, compared to $40.9 million, at 31.2% of total revenue, in the prior year. Operating EBITDA is a supplemental non-GAAP measure of performance. See the heading entitled â€śManagementâ€™s Use of Non-GAAP Financial Measures.â€ť

â€˘
The Company generated $33.2 million of Free Cash Flow through the third quarter compared to $26.3 million last year. As a percentage of Total Revenue, Free Cash Flow increased to 21.1% compared to 20.0% last year. Free Cash Flow is a supplemental non-GAAP measure of performance. See the heading entitled â€śManagementâ€™s Use of Non-GAAP Financial Measures.â€ť

2013 Same-Store Sales â€” Third Quarter

Global same-store sales increased 5.1% compared to a 6.3% increase in 2012, for a two-year growth of 11.4% . Total domestic same-store sales increased 5.1% compared to an 6.8% increase last year for a two-year growth of 11.9% . According to independent data, in the third quarter of 2013 , Popeyes same-store sales outpaced the Chicken-QSR category for the 22 nd consecutive quarter and the QSR category for the 8 th consecutive quarter. International same-store sales increased 5.1% and represented the 15 th consecutive quarter of positive same-store sales growth. Third quarter two-year international same-store sales growth was 7.6% .

Looking Forward to the Remainder of 2013

We expect the rate of our same-store sales growth to moderate in the fourth quarter. Accordingly, we are revising our guidance for fiscal 2013 same-store sales growth to 3.5% to 4.0% from our previous guidance of 3.5% to 4.5%.

Popeyes now expects its global new openings for 2013 will be in the range of 185 to 195 restaurants, compared to previous guidance of 175-195 restaurants. This includes approximately 8 Company and 65 international restaurants. Many of the planned restaurants are scheduled to open in late December. The Company expects net growth of 100 to 120 restaurants, compared to previous guidance of 85-115 net unit growth. Total net unit growth in 2012 was 66.

The Company is narrowing its adjusted earnings per diluted share range to $1.39 to $1.42, compared to previous guidance of $1.37 to $1.42. Adjusted earnings per diluted share reported in fiscal 2012 were $1.24, including approximately $0.01 for the 53rd week.

The Company is also providing the following guidance on additional items:
â€˘
General and administrative expenses are expected to be approximately $74 to $75 million in fiscal year 2013, at approximately 3% of system-wide sales. Previous guidance was approximately $73 to $75 million. General and administrative expenses as a percentage of system-wide sales remain among the lowest in the restaurant industry.
â€˘
The Companyâ€™s effective tax rate is expected to be approximately 37.5% compared to previous guidance of approximately 37%.
â€˘
Depreciation and amortization is expected to be $6.5 to $7.0 million. Previous guidance was approximately $6.0 to $7.0 million.
â€˘
We are increasing the pace of our planned capital investments in high-volume new restaurants. We plan to invest $34 to $36 million, compared to previous guidance of $24 to $28 million. Of the total capital invested during 2013, approximately $21 million will be invested in new and existing company-operated restaurants and another $13 million will be invested in the restaurants we acquired in Minnesota and California.
â€˘
In 2013, the Company plans to repurchase approximately $15 to $20 million of its outstanding shares, continuing its efforts to steadily grow shareholder value.

Comparisons of the Third Quarter for 2013 and 2012

Sales by Company-operated Restaurants

Sales by Company-operated restaurants were $18.6 million in the third quarter of 2013 , a $5.1 million increase from the third quarter of 2012 . The increase was primarily due to a sameâ€“store sales increase of 4.8%, five new restaurant openings in 2012 and four net openings in 2013 .

Franchise Revenues

Franchise revenues have three basic components: (1) royalties that are based on a percentage (typically 5%) of franchisee sales; (2) franchise fees associated with new unit openings and renewals; and (3) development fees associated with the agreement pursuant to which a franchisee may develop new restaurants in a given market. Royalties are the largest component of franchise revenues, generally constituting more than 90% of franchise revenues.
Franchise revenues were $29.2 million in the third quarter of 2013 , a $4.8 million increase from the third quarter of 2012 . The increase was primarily due to a $2.8 million increase in royalty revenue from positive same-store sales and new franchised restaurants, $1.6 million in one-time franchise fees associated with the conversion and franchising of seven California and Minnesota restaurant properties acquired in 2012 and a $0.4 million increase in other franchise revenues, net.

Company-operated Restaurant Operating Profit

Company-operated restaurant operating profit (â€śROPâ€ť) was $3.3 million , or 17.7% of sales, compared to $2.2 million , or 16.3% of sales last year. The $1.1 million increase in ROP was primarily due to higher revenues resulting from positive same-store sales and new restaurant openings. The improvement in ROP margin was primarily attributable to lower commodity cost and increased leverage on occupancy and other expenses. Company-operated restaurant operating profit margin is a supplemental non-GAAP measure of performance. See the heading entitled â€śManagementâ€™s Use of Non-GAAP Financial Measures.â€ť

General and Administrative Expenses

General and administrative expenses were $16.2 million , or 2.8% of system-wide sales, compared to $14.7 million , or 2.9% of system-wide sales last year.
The $1.5 million increase in general and administrative expenses was primarily attributable to a:

â€˘
$0.3 million increase in domestic franchisee restaurant support services and assessments,

â€˘
$0.6 million increase in performance-based incentive compensation expense, and

â€˘
$0.6 million increase in global supply chain, domestic franchisee development and other expenses, net.

Depreciation and amortization

Depreciation and amortization was $1.6 million compared to $1.1 million last year. The increase in depreciation and amortization is primarily attributable to depreciation associated with new company-operated restaurants, restaurant reimages, acquired restaurant properties converted and leased to franchisees in Minnesota and California, information technology assets and our corporate support center facility.

Operating Profit

Operating profit was $15.4 million , a $4.3 million increase compared to 2012 . The following is an analysis of the fluctuations in operating profit by business segment. Operating profit for each reportable segment includes operating results directly attributable to each segment plus a 5% inter-company royalty charge from franchise operations to company-operated restaurants.

The $4.3 million growth in franchise operations was primarily due to the $4.8 million increase in franchise revenue partially offset by increases in general and administrative expenses related to domestic franchisee restaurant support services and assessments, performance-based incentive compensation expense and other general and administrative expenses, net.

Company-operated restaurants segment operating profit was $1.2 million , a $0.5 million or 71.4% increase from 2012. The increase in company-operated restaurants segment operating profit was attributable to a $1.1 million increase in restaurant operating profit partially offset by higher multi-unit management expenses in new company-operated restaurant markets Indianapolis and Charlotte, inter-company royalties and other general and administrative expenses, net.

Income Tax Expense

Income tax expense was $5.6 million at an effective tax rate of 38.4% , compared to an effective tax rate of 33.7% in 2012 . The higher effective tax rates in 2013 are primarily due to higher state income taxes in 2013 and the recognition of worker opportunity tax credits and foreign income tax credits in 2012. The effective tax rates differ from statutory rates due to adjustments to estimated tax reserves, tax credits and permanent differences between reported income and taxable income for tax purposes.

Comparisons of the Forty Weeks Ended October 6, 2013 and September 30, 2012

Sales by Company-operated Restaurants

Sales by Company-operated restaurants were $60.0 million in the forty weeks ended October 6, 2013 , a $12.4 million increase from 2012 . The increase was primarily due to a sameâ€“store sales increase of 3.2%, five new restaurant openings in 2012 and four net openings in 2013 .

Franchise Revenues

Franchise revenues were $93.5 million in the forty weeks ended October 6, 2013 , a $13.1 million increase from 2012 . The increase was primarily due to a $8.4 million increase in royalty revenue from positive same-store sales and new franchised restaurants and $4.1 million in one-time franchise fees associated with the conversion and franchising of 18 California and Minnesota restaurant properties acquired in 2012 and a $0.6 million increase in other franchise revenues, net.

Company-operated Restaurant Operating Profit

Company-operated restaurant operating profit ("ROP") was $11.2 million in the forty weeks ended October 6, 2013 , or 18.7% of sales, compared to $8.5 million , or 17.9% of sales, last year. The $2.7 million increase in ROP was primarily due to higher revenues resulting from positive same-store sales and new restaurant openings. The improvement in ROP margin was primarily attributable to increased leverage on occupancy and other expenses. Company-operated restaurant operating profit margins is a supplemental non-GAAP measure of performance. See the heading entitled â€śManagementâ€™s Use of Non-GAAP Financial Measures.â€ť

General and Administrative Expenses

General and administrative expenses were $55.0 million in the forty weeks ended October 6, 2013 , or 2.9% of system-wide sales, compared to $49.7 million , or 2.9% of system-wide sales, last year.

The $5.3 million increase in general and administrative expenses was primarily attributable to:
â€˘
a $1.1 million increase in international franchise development and marketing support expenses,
â€˘
a $0.8 million increase in domestic franchisee restaurant support services and assessments,
â€˘
$0.6 million in marketing and menu development expenses,
â€˘
$0.6 million in multi-unit management expenses in new Company-operated restaurant markets in Indianapolis and Charlotte,
â€˘
a $0.7 million increase in performance-based incentive compensation expense, and
â€˘
a $1.5 million increase in leadership development, global supply chain, domestic franchisee development and other expenses, net.

Depreciation and amortization

Depreciation and amortization was $4.9 million compared to $3.5 million last year. The increase in depreciation and amortization is primarily attributable to depreciation associated with new company-operated restaurants, restaurant reimages, acquired restaurant properties converted and leased to franchisees in Minnesota and California, information technology assets and our corporate support center facility.

Operating Profit

Operating profit was $46.1 million , a $9.4 million increase compared to 2012 .

The $9.5 million growth in franchise operations was primarily due to the $13.1 million increase in franchise revenue partially offset by increases in general and administrative expenses related to international franchise development and marketing expenses, domestic franchisee restaurant support services and assessments, marketing and menu development expenses, performance-based incentive compensation expense and leadership development and other general and administrative expenses, net.

Company-operated restaurants segment operating profit was $5.0 million , a $1.3 million or 35.1% increase from 2012 . The increase in company-operated restaurants segment operating profit was attributable to a $2.7 million increase in restaurant operating profit partially offset by higher multi-unit management expenses in new company-operated restaurant markets Indianapolis and Charlotte, inter-company royalties and other general and administrative expenses, net.

Income Tax Expense

The Company's effective tax rates were 37.4% and 35.9% for the forty week periods ended October 6, 2013 and September 30, 2012 , respectively. The higher effective tax rates in 2013 are primarily due to higher state income taxes in 2013 and the recognition of worker opportunity tax credits and foreign income tax credits in 2012. The effective tax rates differ from statutory rates due to adjustments to estimated tax reserves, tax credits and permanent differences between reported income and taxable income for tax purposes.

Our franchise model provides diverse and reliable cash flows. Net cash provided by operating activities of the Company was $37.2 million and $28.2 million for the forty week periods ended October 6, 2013 and September 30, 2012 , respectively. See our condensed consolidated statements of cash flows in Part 1, Item 1 to this quarterly report. Based primarily upon our generation of cash flow from operations, our existing cash reserves (approximately $13.2 million available as of October 6, 2013 ), and available borrowings under our 2010 Credit Facility (approximately $22.6 million available as of October 6, 2013 ), we believe that we will have adequate cash flow to meet our anticipated future requirements for working capital, including various contractual obligations and expected capital expenditures.

Our cash flows and available borrowings allow us to pursue our growth strategies. Our priorities in the use of available cash are:
â€˘
reinvestment in our core business activities that promote the Companyâ€™s strategic initiatives,
â€˘
repurchase shares of our common stock, and
â€˘
reduction of long-term debt.

Our investment in core business activities includes our obligation to maintain our company-operated restaurants and provide marketing plans and operations support to our franchise system.

Under the terms of the Companyâ€™s 2010 Credit Facility, quarterly principal payments of $1.5 million will be due during 2013 and 2014, and $4.5 million during 2015.

Pursuant to the 2010 Credit Facility, the Company is subject to a Total Leverage Ratio requirement of 2.75 to 1.0 through December 23, 2015. As of October 6, 2013 , the Companyâ€™s Total Leverage Ratio was 0.94 to 1.0. The Total Leverage Ratio is defined as the ratio of the Companyâ€™s Consolidated Total Indebtedness to Consolidated EBITDA for the four immediately preceding fiscal quarters. Consolidated Total Indebtedness means, as at any date of determination, the aggregate principal amount of Indebtedness of the Company and its Subsidiaries.

The Company repurchased 155,590 shares of our common stock for approximately $6.5 million during the third quarter of 2013 . Through the end of the third quarter of 2013, the Company repurchased 389,718 shares of our common stock for approximately $14.9 million. As of November 13, 2013 , the remaining value of shares that may be repurchased under the Companyâ€™s current share repurchase program was approximately $36.5 million . The Company may repurchase and retire its common shares at any time its Total Leverage Ratio is less than 2.00 to 1.

CONF CALL

Rebecca Gardy - Director of Finance & Investor Relations
Thank you, and good morning. This is Rebecca Gardy, Director of Finance and Investor Relations. AFC Enterprises is pleased to host this conference call regarding results issued yesterday after the market closed for third quarter 2013, which ended October 6, 2013. Today's audio presentation will be available on the company's website at www.afce.com. To listen to it, please go to the Investor Relations section and follow the link to Webcasts & Presentations. A copy of our press release and all filings with the Securities and Exchange Commission are also available on the website.

Before we begin, I would like to read the following forward-looking statements. Certain statements made on this call by AFC Enterprises' officers and employees regarding future events and developments and our future performance, as well as management's expectations, beliefs or projections relating to the future, are forward-looking statements within the meaning of the federal securities laws. We wish to caution investors to not place undue reliance on any forward-looking statements since those statements speak only to the date they are made. By their nature, forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. These risks and uncertainties have been described in the company's annual report on Form 10-K, quarterly reports on Form 10-Q and in other filings with the Securities and Exchange Commission. We refer you to these sources for more information.

During this call, references may be made to the non-GAAP terms of company-operated restaurant operating profit, operating EBITDA, free cash flow and adjusted earnings per share. The company defines these terms as follows: company-operated restaurant operating profit is defined as sales by company-operated restaurants minus restaurant food, beverages and packaging, minus restaurant employee, occupancy and other expenses; operating EBITDA is defined as earnings before interest expense, taxes, depreciation and amortization and other expenses or income net; free cash flow is defined as net income plus depreciation and amortization, plus stock compensation expense, minus maintenance capital expenses; adjusted EPS for the period presented is defined as reported net income after adjusting for certain nonoperating items consisting of: one, other income net; and two, the tax effect of these adjustments.

The company's full definitions, computations and reconciliations to the GAAP measures of these numbers referenced for these terms are contained in our earnings press release that can be found on the company's website at www.afce.com.

Presenting on today's call will be Chief Executive Officer, Cheryl Bachelder; and Chief Financial Officer, Mel Hope. We are also joined by Ralph Bower, President, U.S.

I would now like to turn the call over to Cheryl. Cheryl?

Cheryl A. Bachelder - Chief Executive Officer, President, Director, Member of Executive Committee and President of Popeyes (R) Chicken & Biscuits' Brand
Thank you, Rebecca. Good morning, everyone, and welcome to Popeyes third quarter earnings conference call. It's appropriate to begin our call this week with a thought around Veterans Day. We want to today recognize one of our largest franchisees around the world, the Army and Air Force Exchange Service. AFES currently operating 79 Popeyes restaurant in 11 countries, including Japan, Italy, Germany and the United Kingdom. We're honored to have a partner like AFES that embraces our service leadership principle and is passionate about providing superior food and service for our military veterans, active-duty troops and their family. We thank you AFES.